India must call the US' bluff on patents
The recent US-India friction over trade is being driven by Big Pharma
Apart from the deterioration of the business environment generally, which impacts both domestic and foreign investors, retrospective taxation has figured most prominently in the media as the principal cause of growing scepticism among foreign investors. Entirely missing from the discourse has been an equally potent factor with wholly foreign origins: the hijacking of the economic policy dialogue between the United States and India by pharmaceutical lobbies in the US. Big Pharma has convinced the US government that the country's interests are synonymous with its own. With its own list of grievances against trade restrictions in India, the National Association of Manufacturers, a lobby group of the United States manufacturers, has lent its support to the pharmaceutical industry.
Big Pharma is currently using its considerable clout to pressure the United States Trade Representative (USTR) into designating India as a "priority foreign country" in its 2014 Special 301 Report due on April 30, 2014. The designation is reserved for the worst offenders of intellectual property rights and triggers trade sanctions. If the USTR obliges, the immediate impact will be the withdrawal of tariff preferences enjoyed by India on $4.5 billion worth of its exports to the US. It is unlikely that in an election year, India will let such an act of hostility go unreciprocated. In all likelihood, it will retaliate through anti-dumping duties or outright increases in tariffs on imports from the US.